WASHINGTON -- Small community banks need relief from regulations put in place after the financial crisis, Candace Franks, head of Arkansas' Bank Department, told lawmakers Tuesday.
Franks spoke on behalf of the Conference of State Bank Supervisors at a hearing held by the Senate Committee on Banking, Housing and Urban Affairs. The committee is considering the effects of the post-crisis rules on small banks and also heard from representatives of the Federal Deposit Insurance Corp., the Federal Reserve System and the National Credit Union Administration.
"There's a lot of consensus in the committee, and bipartisan consensus, that there needs to be regulatory relief ... for community banks, which certainly all of our Arkansas banks are," she said.
She told the committee that one in five counties in the United States have only community bank locations. In Arkansas, 96 towns have only one banking site, she said.
Franks said Arkansas banks are concerned about the cost of complying with new regulations, such as those on mortgages and loans.
"It's a big problem," Franks said. "It's very costly when you have a bank in Smackover, Ark., that has to hire a second compliance officer. When you have to hire any additional staff in order to implement these regulations and in order to understand them, it is difficult, and in small Arkansas communities it's difficult to find personnel to fill those positions."
The Federal Reserve System defines a community bank as having less than $10 billion in assets. Those banks are exempt from oversight and reporting to the Consumer Financial Protection Bureau.
Franks said that rather than an asset amount, regulators also should consider where the bank operates, if the lending is primarily local and if its corporate offices are in the region.
The committee isn't considering specific legislation, but at least one industry group, the Independent Community Bankers of America, is pushing for legislation that would raise that exemption threshold to $50 billion.
Sen. Elizabeth Warren, D-Mass., questioned whether raising the threshold would help small banks and said she is concerned about who would benefit from efforts to change regulations put in place after the financial collapse.
"I want to be sure that it's really about helping community banks and not about helping their much larger competitors," she said. "The big banks are going to keep using the small banks as cover for their special rollbacks; that's what they did before the crisis, and that's what they've been doing after the crisis. We shouldn't fall for that trick."
Business on 02/11/2015